Practical Applications of ASTM’s Building Energy Performance Assessment (BEPA) Standard E 2797-11

Building on my previous post, consider some potential practical applications of the ASTM’s new “BEPA” standard:

• Use with projects in connection with Arkansas’s Sustainable Buildings Design and Sustainable Energy-Efficient Buildings Design programs;
• Use by developers, lenders, borrowers, and investors as part of the due diligence into a commercial real estate deal;
• Use in connection with state and local laws that either mandate energy-efficiency performance or require disclosure of energy-efficiency performance information;
• Use in combination with energy audits (i.e., ASHRAE Level I) and other energy efficiency benchmarking efforts;
• Use by Energy Service Companies (ESCOs) for projects designed to improve the energy efficiency and maintenance costs of commercial buildings;
• Use in connection with loans or other financing for energy-efficiency projects and improvements;
• Use in connection with regulatory disclosure requirements for energy-use;
• Use in comparing similarly situated buildings in connection with the asset management of a portfolio or to evaluate potential investments;
• Use to identify potential energy efficiency retrofit opportunities to improve return on investment and to increase the value of commercial real estate;
• Use by lenders to evaluate a borrower’s ability to repay financing based on lower operating expenses due to improved energy efficiency, and to evaluate increases in the value of collateral due to energy efficiency improvements;
• Use in connection with governmental incentive programs linked to energy efficiency improvements and performance.

BEPA “best practices” will undoubtedly emerge. Stay tuned.

(Department of Credit Where Credit is Due: This list is largely drawn from a January 2011 presentation by Anthony j. Buonicore, the Chairman of the ASTM BEPA Task Group.)

ASTM E2797-11: A New Standard for Assessing Energy Performance in Commercial Buildings?

One of the dominant trends in the law of sustainability is that the regulations that govern green building construction and performance – think of them as “green building codes” – are not written by legislators or municipalities but by private, non-governmental organizations. The most visible example of this phenomenon is the U.S. Green Building Council’s LEED green building certification system.

Another key player in private green regulation is ASTM International. ASTM started life in 1898 as the American Society for Testing and Materials. It is an international standards organization that develops and publishes voluntary consensus technical standards for a wide range of materials, products, systems, and services. And in February of this year, ASTM published its “Building Energy Performance Assessment (BEPA) Standard,” known in shorthand as ASTM E2797-11 or as simply the ASTM BEPA standard.

A technical dissertation on BEPA’s provisions is beyond the scope of this post (and would likely put you to sleep). But here is the meat of the coconut:

• The BEPA standard is intended to “define a commercially useful practice for collecting, compiling, and analyzing building energy performance information associated with a building involved in a commercial real estate transaction”;
• The BEPA standard has five basic components – (1) a site visit; (2) collection of records, information, and data; (3) review and analysis of the collected materials; (4) interviews; and (5) preparation of a report; and,
• BEPA is designed to be used in connection with other design and ratings standards, such as LEED, ASHRAE, and Energy Star.

It will take some time for the practical effect of BEPA to become clear. Another “outside the scope” use of the BEPA standard is that it complements the Sustainable Buildings Design and Sustainable Energy-Efficient Buildings Programs already on the books in Arkansas. The guidelines associated with the programs recommend energy data measurement and collection, and BEPA could provide a uniform standard by which to do so.

Another reasonable expectation is that BEPA assessments will become part of the due diligence associated with commercial real estate transactions. There is a precedent for this, as the ASTM “Environment Site Assessment (Phase I) Standard” has become a standard point of due diligence.

We can also anticipate that the BEPA standard will be incorporated into state and local law regarding building “labeling” – i.e., regulations that require building owners to measure and disclose certain energy efficiency data about a building. Such requirements are vogue in places like New York City and Austin, Texas. While Arkansans do not take many cues from the Big Apple (at least, not that we admit to), there is a known close relationship between Little Rock Mayor Stodola and his counterpart in Austin.

A final consideration is the Gifford v. USGBC lawsuit, which, among other things, challenges the effectiveness of the LEED rating system in measuring a building’s energy efficiency. Despite the claims in Gifford, it seems that there is little debate that LEED is a system related to designing buildings, and not for measuring their performance. Indeed, part of the USGBC’s response to the Gifford suit is that “LEED is premised on identifying strategies intended to improve building design,” and that, with the exception of the “existing buildings program, the LEED certification process does not assess the actual environmental performance of any of the structures for which certification is sought or granted.”

Nonetheless, the LEED system has become the rock upon which the green castle is built as an increasing number of states and municipalities – Arkansas and the cities of Fayetteville and Little Rock included – have sought to green their building practices and to legislate sustainability and energy efficiency. While there is evidence that LEED-certified buildings are more energy efficient than their non-certified counterpart, the LEED system is not a building code and certification is not a substitute for a systematic analysis of a building’s performance. This means that in many cases, the LEED system is being but to a task for which it was never intended. The BEPA standard fills this gap.

In short, local governments, developers, energy raters, lawyers, investors, bankers, and deal-doers of all types who deal with green commercial real estate and who want to get ahead of the curve should add a new acronym to their vocabulary. Absent some “battle of the standards,” BEPA is here.

(Department of Citation: The material quoted from the USGBC’s response to the Gifford suit comes from the “U.S. Green Building Council’s Memorandum of Law in Support of Motion to Dismiss First Amended Complaint,” United States District Court for the Southern District of New York civil action no. 1:10-cv-07747, Docket No. 20 at p. 5.)

Arkansas Appropriates $20 Million for the Sustainable Building Design Program

One of the hidden victories for the sustainable building community that emerges from the last session of the Arkansas legislature is a significant appropriation of up to $20,000,000 to the Arkansas Sustainable Building Program.

The Sustainable Building Program is administered by the Arkansas Building Authority and was established in 2009. It is a loan program, funded through a revolving fund, designed to assist Arkansas agencies, boards, and commissions to make energy efficiency upgrades and renovations to state owned facilities.
Here are the basic contours of the Program:

• The agency, board, or commission seeking funding must be authorized by law to make renovations to state owned facilities.
• The renovations or improvements must exceed $250,000.00.
• To qualify for funding as a sustainable building design project, the state-owned facility must be a facility of the requesting agency and must be designed, renovated, and certified pursuant to the Arkansas Energy Office’s requirements of the “The Sustainable Energy-Efficient Building Program,” which, in broad strokes, establishes a performance criteria of a 10% reduction in baseline energy consumption.
• The loans carry an origination fee of .5%, up to $2,500.00, per loan.
• The maximum term of a loan is 10 years.
• The Program only applies to capital improvements for existing buildings and not for new construction.

Eligible renovations and upgrades include weatherization, improvement or increase in insulation, replacement of doors, windows, and skylights, upgrades in lighting technology, replacement of heating, ventilation, heat recovery, steam system, or air conditioning systems, improvements to energy control systems and sensors, and other energy efficiency projects that will result in a significant reduction in the consumption of energy within a building. Significantly, costs for equipment or systems that reduce energy costs without reducing energy consumption are not eligible.

As noted above, the Program is designed to work in connection with the Sustainable Energy-Efficient Buildings Program, which is a program that promotes energy conservation in buildings owned by public agencies and institutions of higher education.

In the view of this sustainablawger, the Sustainable Building and the Sustainable Energy-Efficient Buildings Programs show Arkansas “leading by example” and represent a public policy that promotes sustainable building practices. The programs will also provide much needed economic and political support for Arkansas’ emerging sustainable building industry.

Only time will tell if these programs are actually sufficient to achieve these goals. But it is abundantly clear that one of the main impediments in promoting sustainable energy development and consumption has been gap in financing. For state agencies, the Sustainable Building Program holds real promise both for filling that gap.

(Department of Citation: the Sustainable Building Program can be found in the Arkansas Code Annotated at section 22-3-1901 et seq., and the Sustainable Energy-Efficient Buildings Program can be found at section 22-3-2001 et seq.)
(Department of Rules and Regulations: the Arkansas Building Authority’s July 2010 Sustainable Building Design Program Procedures can be found at www.aba.arkansas.gov/aboutUs/Documents/sustainanble_rules_04_15_10.pdf.)